Tips on buying different types of insurance

NORTHAMPTON — Here are things to keep in mind when shopping for different types of insurance:

HOME: You should secure enough home insurance to cover your house, contents, exterior buildings (such as garages and sheds) and to provide some money for loss of use — cash that can cover expenses such as rent or hotel fees, food and transportation while your home is being fixed. A walk through your home with a contractor can help you estimate how much it would cost to construct your home and, therefore, how much coverage you need.

But Peter Whalen, owner of Whalen Insurance Agency in Northampton, noted that if you use the insurance company’s approved cost estimator, you likely won’t be left hanging without enough money to cover your costs following a disaster. “It’s their estimate,” Whalen said, “they have to just accept it.”

AUTO: In Massachusetts there are minimum insurance limits for auto coverage. Each policy has to provide at least $20,000 per person and $40,000 per accident for bodily injury; $5,000 for damage to someone else’s property; $20,000 per person and $40,000 per accident for bodily injury caused by an uninsured motorist; and $8,000 per person per accident for personal injury protection.

The Wall Street Journal’s guide to buying auto insurance suggests that people go with a high deductible because it lowers the cost of the annual premium and most people don’t file small claims because any claim can make a premium rise. So, while a person will pay more out of pocket if a claim is filed, the policy will cover more of a high-cost crash than a policy with a smaller deductible typically would.

The Journal’s guide also suggests saving money on your auto policy by skipping towing coverage and signing up for a AAA membership, which includes towing services.

UMBRELLA: This liability policy kicks in when you’ve reached your limit on home or auto insurance, but the cost of the damages have not been rectified. It also provides protection in case you are sued under certain circumstances. The policies can be inexpensive, with $150 a year buying you an additional $1 million in coverage, according to Webber & Grinnell Insurance of Northampton’s website.

RENTERS: Don’t assume your landlord’s insurance will take care of your property in the case of theft, fire or other disaster — it probably won’t.

Renters insurance covers your own property and provides liability coverage if a guest is hurt in your home and it is found not to be the landlord’s fault. Check to make sure the policy will provide money if, say, the home you were renting burns down and you need cash for living expenses while you’re trying to find new housing.

Renters coverage for a year costs about $100 to $300, according to www.knowyourstuff.org, a website that helps people keep a record of their belongings for insurance purposes.

LIFE: If you don’t have dependents or a taxable estate you probably don’t need life insurance right now, but, if you can afford it, get it anyway.

If you’re young and healthy, the premium will be low and you won’t have to apply when you’re older and in worse condition, a time when it may be harder to find an insurer at a reasonable rate. A Forbes magazine article, “Five common myths about life insurance needs,” suggests that people do not need to have enough life insurance coverage to replace a lifetime’s income, should you die early.

This calculation does not take into account survivor’s benefits or the age of dependents — a 17-year-old child will not require as many years of financial support as a 10-year-old child, for example.

Also, life insurance does not ease the debt burden you could leave to your loved ones — your debts don’t get transferred to your family unless they co-signed for something you still owe money on. The Forbes article links to a life insurance needs calculator that can help you figure out how much insurance you should have.

One of the first insurance companies in America was founded by Benjamin Franklin in 1752. Despite the industry’s long reign in the U.S., many people still have basic questions about insurance. Who needs it? How much should a person have? What does all that fine print mean? To be fair, insurance has gotten more complicated since Franklin’s Philadelphia Contributorship was …